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MFN Financial Corp. Reports Results for 3Q and Nine Months

MFN Financial Corporation has announced financial results for the third quarter and nine months ended Sept. 30, 2000.

Net income for the quarter was $4.3 million, compared to $13.1 million for the same period one year ago. Earnings were $0.43 per share on a basic and diluted basis for the current quarter, compared to $1.31 per share on a basic and diluted basis for the same period one year ago. Results for the third quarter of 2000 included a gain on early retirement of debt and, for the same period last year, included a gain on the sale of assets, reversal of a tax valuation allowance and a gain on early retirement of debt. Excluding these items, net income for the third quarter of 2000 was $3.8 million, compared to $3.5 million for the same period one year ago.

Net income for the first nine months of 2000 was $17.1 million, or $1.71 per share on a basic and diluted basis. Consistent with the company's adoption of Fresh Start reporting as of March 31, 1999, financial results for the nine months ended Sept. 30, 2000 are not comparable to the same period one year ago.

Sales finance receivable originations for the quarter were $81.7 million, compared to $75.0 million for the same period one year ago. Direct loan originations for the same periods were $1.9 million and $7.6 million, respectively. Total delinquent accounts, 60 days or more past due, and net repossessed assets at Sept. 30, 2000, were $9.9 million, or 1.98 percent of finance receivables, compared to $17.1 million or 3.16 percent of finance receivables at Sept. 30, 1999. Net charge-offs in the current quarter were $13.3 million or 10.62 percent, annualized, of average finance receivables, compared to $19.3 million or 13.29 percent, annualized, of average finance receivables for the quarter ended Sept. 30, 1999.

"The company remains on track with our focused approach to the automobile sales finance business," said Edward G. Harshfield, chairman and CEO. "We remain convinced that our concentration on indirect auto receivables as our core business, coupled with a strengthening balance sheet and the successful implementation of new systems to achieve maximum operating efficiency will, in the end, produce the best possible results for our shareholders," Harshfield added.

Total assets at Sept. 30, 2000 were $581.1 million, compared to $587.8 million at Sept. 30, 1999. Finance receivables, net of unearned income, were $497.8 million at quarter end, compared to $541.4 million one year ago. More than half of the decline in total finance receivables is attributable to the strategic decision to exit the direct loan business. Total direct loans outstanding declined $23.3 million in the past year or 59.3 percent. During this same period, sales finance receivables declined $20.3 million or 4.0 percent, with the majority of the decline occurring in the 4th quarter of last year. Since that time, the core portfolio has remained relatively stable.

Reserves and allowances for credit losses totaled $69.5 million or 13.96 percent of finance receivables at Sept. 30, 2000. Total stockholders' equity was $122.6 million or $12.26 per common share outstanding at quarter end.

MFN Financial Corporation, with headquarters in Lake Forest, Ill., is a consumer finance company whose principal subsidiaries operate under the name of Mercury Finance Company. Mercury Finance provides specialized, individual financing for automobile nonprime credit buyers through automobile dealerships and offers credit insurance and other related products directly to consumers.